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New Mexico Usury Laws

New Mexico does not have a statutory scheme governing usury limitations per se. However, the statutes of the State of New Mexico has established a legal interest rate of 15%. Although there are no usury limitations per se contained within the New Mexico legal scheme, there are serious consequences that flow from a failure of a lender making a personal loan keeping the companion interest rate at 15% or less.

First, if a personal loan agreement is entered into with an interest rate in excess of 15%, generally speaking such a loan will be considered illegal in New Mexico. Although there are no criminal sanctions that necessarily can be imposed in such a situation, there are other sanctions that do follow.

Because the loan itself will be deemed to be illegal, it will be considered void and unenforceable. By this it is meant that if a borrower defaults on such a loan, that borrower will have a perfect defense to make any additional payments. The borrower simply can contend that the loan agreement was illegal in the first instance. A court of law in New Mexico will not enforce the loan agreement and the borrower really will be off the hook, as they say.

When it comes to interest rates on civil judgments, the laws in New Mexico are rather unique. It is completely up to the discretion of the court as to what the judgment will be in a civil case. What tends to happen is that if the court thinks the defendant may have had a reasonable defense, the interest rate on the judgment will be lower. On the other hand, if the court ends up concluding that the defense was not particularly reasonable, the interest rate on the judgment actually may end up being higher.

There are other statutory provisions governing different types of lending arrangements, lending practices and loans. For example, there are statutory provisions that govern loans made by financial institutions that have been chartered and authorized to do business by the State of New Mexico.

The statutes governing lending practices and related issues can be found codified at New Mexico Chapters Annotated at Chapters 39, 47, 55, and 58.

NEW MEXICO, the legal rate of interest is 15%. Judgment rate is fixed by the Court.

Nothing in this article should be construed as providing you legal advice. If you have any specific questions or concerns after reading this article, you should consult with an attorney. Additionally, we do take all reasonable steps necessary to keep the information and materials up to date and accurate. However, the statutes governing loans and interest rates in New Mexico do change from time to time.

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